An Alternative to Municipal Bond Insurance: Tax Offset Municipal Securities (TOMS™)

Paul Fennell

Municipal Finance Journal, 2012, vol. 33, issue 1, 115 - 121

Abstract: The author has filed a patent on a financing structure intended as a replacement for municipal bond insurance. The underlying concept is simple: If an issuer fails to pay, a holder receives equivalent tax credits in lieu of payment. It is a structure designed to produce AAA credit enhancement without counterparty exposure or credit risk. This article explores the economic rationale and the legal underpinnings of using this tax-offset mechanism as an insurance backstop.

Date: 2012
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